Correlation Between Apple and Altius Minerals

Can any of the company-specific risk be diversified away by investing in both Apple and Altius Minerals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Apple and Altius Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc CDR and Altius Minerals, you can compare the effects of market volatilities on Apple and Altius Minerals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Apple with a short position of Altius Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Altius Minerals.

Diversification Opportunities for Apple and Altius Minerals

-0.83

Correlation Coefficient

Apple  Altius Minerals

Pay attention - limited upside

The 3 months correlation between Apple and Altius is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Altius Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altius Minerals and Apple is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Apple Inc CDR are associated (or correlated) with Altius Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altius Minerals has no effect on the direction of Apple i.e., Apple and Altius Minerals go up and down completely randomly.

Pair Corralation between Apple and Altius Minerals

Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the Altius Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 1.08 times less risky than Altius Minerals. The stock trades about -0.01 of its potential returns per unit of risk. The Altius Minerals is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,071  in Altius Minerals on January 30, 2024 and sell it today you would earn a total of  134.00  from holding Altius Minerals or generate 6.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  Altius Minerals

Apple Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Altius Minerals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altius Minerals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Altius Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Altius Minerals

The main advantage of trading using opposite Apple and Altius Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Altius Minerals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Altius Minerals will offset losses from the drop in Altius Minerals' long position.

The idea behind Apple Inc CDR and Altius Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.